China Press Review – February 26, 2019

Press review

China can’t accept US demands for a strong yuan in trade war negotiations
It is one thing for Washington to call on Beijing to stabilise the yuan; quite another for it to insist on a strong Chinese currency when it relies on the weakness of its own dollar

US-China trade war has hit ‘about half’ of businesses in southern China, AmCham survey says
American Chamber of Commerce in South China report contacted 240 firms, with 54 per cent of American companies losing out to competitors from overseas Firms looking to relocate supply chains cite higher costs and trade barriers in China

Trump boasts about trade relationship with China
President Donald Trump declared Monday he would participate in a “signing summit” with Chinese leader Xi Jinping as the world’s two largest economies edged closer to a trade deal.

The Latest Winner From the U.S.-China Trade Fight: Canada
Country ships record amount of soybeans to China in January U.S. cargoes shrink to a fraction of what they were last year

Several Chinese negotiators stay in Washington to continue talks on thorny trade issues
Vice-Premier Liu He, the head of the delegation, has left Washington to return to Beijing, sources say The two sides held ‘some technical level’ discussions on Monday morning

Will the US-China trade war improve access for American firms seeking to tap 1.4 billion people?
Washington feels Beijing has been discriminating against US businesses, limiting investment and trade flows while also imposing restrictive non-tariff barriers Bank card service providers Mastercard and Visa have been seeking to start yuan payment services since a WTO ruling in 2012, but are still waiting for approval

Trump wants ‘signing summit’ with Xi as trade deal nears
Both sides look to limit economic damage, but subsidy issue remains unresolved

Trump, Trade and the Advantage of Autocrats
China can pay him off; places with rule of law can’t.

US-China trade war biggest threat to global economy in 2019, research shows
Experts also warned that the impact of a no-deal Brexit could prove sizeable enough to dent global economic growth

Rising level of corporate debt a risk to global economy – OECD
According to research from the Economist Intelligence Unit, a potential meltdown in the US bond market is the second biggest risk to the world economy after the US-China trade standoff, amid a combination of global economic headwinds “more wide-ranging and complex than at any point since the great recession”. The International Monetary Fund has previously warned of gathering “storm clouds” for the world economy, including from trade tensions and heightened levels of debt – particularly in China.

Debt is roaring back in China
From bank loans to trust-product issuance to margin-trading accounts at stock brokerages, leverage in China is rising nearly everywhere you look.

China reaches deleveraging goals but stresses work left to do
According to the China Banking and Insurance Regulatory Commission, China has hit its years-long structural deleveraging campaign goals but the country still has to continue efforts in reducing risks caused by excessive leverage in the system, reports Caixin.

China reaches deleveraging goals but stresses work left to do

Ominous Signals for World Trade Growth
Buffeted by the trade war declared by US President Donald Trump and by what more and more looks like a significant downturn in China’s economy, trade weakness is likely to extend into the first quarter of 2019, according to the WTO’s latest World Trade Outlook Indicator. “The simultaneous decline of several trade-related indicators should put policy-makers on guard for a sharper slowdown should the current trade tensions remain unresolved,” the WTO said in a prepared release.

Ominous Signals for World Trade Growth

American businesses in China see gloomy year ahead
US companies in China forecast a gloomy year ahead, with many worrying about a deterioration in bilateral trade ties and nearly a quarter delaying investments, a business survey showed Tuesday.

China’s economy shows signs of slowdown, Harvard economist says
Harvard University Economics Professor Kenneth Rogoff on U.S. trade negotiations with China, Huawei and concerns of a potential U.S. recession. The U.S. economyOpens a New Window. is doing “pretty well” right now, but Harvard University Economics Professor Kenneth Rogoff says the rest of the world, especially China, has problems. “There’s a slow patch in the global economy — I think China’sOpens a New Window. more than a slow patch,” he said during an interview on FOX Business’ “Mornings with MariaOpens a New Window.” on Monday. “It may have a soft landing, but it will be onto a downward slope. Centralizing power doesn’t work in trying to have a productive economy.”

Allies Not Out of America’s Line of Fire
With the continuing US-China trade conflict hanging fire, Australia, Japan, and India may see security ties as a chance to boost their status in Washington. But the Trump administration’s crusade on trade could very well engulf them, too. There is an old idea in retail: a shop should always have a loss leader, something flashy in the front that lures the passers-by. The US’s China policy perhaps functions in a similar way. The downturn in US-China relations has cast a long shadow over all conversations on international affairs.

Allies Not Out of America’s Line of Fire

British spy chief warns of deeper Chinese tech threat
The head of the UK’s GCHQ intelligence service, Jeremy Fleming, believes that the growing involvement of Chinese tech firms in Western economies poses a “hugely complex technological challenge,” that runs much deeper than Huawei, according to the Independent.

British spy chief warns of deeper Chinese tech threat

A record number of Chinese billionaires fall off Hurun’s rich list as 2018 stock market rout ravaged their fortunes
Only 658 super-rich individuals living in the Greater China region made it to the 2019 list, down from 819 last year

These Three Things Are Contributing To China’s Bullish Stock Market
To every China bear alive, this year’s outperformance in mainland Chinese equities (known as the A-shares) is a complete fluke. It’s only a matter of time for the correction.

China central bank to encourage innovation in financial markets this year
China’s central bank said on Tuesday that it will give guidance on macro-credit policy this year and encourage financial market innovation to boost the economy.

Alibaba Cloud renews push into global markets with new releases
Alibaba Cloud, the cloud computing arm of Alibaba Group, launched a group of new products during the annual Mobile World Congress in Barcelona, Spain on Monday. The move brings services previously only available in mainland China to the international market. The new services range from server-less computing, data analytics, global networking, high-performance storage, and an enterprise database that let customers derive actionable business insights. Alibaba Cloud started its globalization initiative four years ago and now operates in multiple countries including Hong Kong, Singapore, India, Japan, Australia, and the US.

Briefing: Alibaba Cloud renews push into global markets with new releases

AlipayHK coming to ‘Greater Bay Area’ cities and Japan
Starting next month, users of AlipayHK will be able to use the e-wallet service in a few cities in southern China, as well as in Fukuoka, Japan, said AlipayHK on Tuesday.

Pinduoduo eyes high-end buyers in cross-border e-commerce launch
Social e-commerce platform Pinduoduo is expanding into China’s booming cross-border e-commerce business in an effort to meet growing consumer demand for quality goods, according to Chinese media citing people familiar with the matter. The company launched into the e-commerce stratosphere by appealing to consumers seeking lower prices by offering social tools for discounted group buys on its main selling platform

Pinduoduo eyes high-end buyers in cross-border e-commerce launch

First truck completes Europe-China delivery in 12 days
The first overland delivery of European goods bound for China arrived safe and sound last week, in a good omen for Europe’s hopes of making the East Asian superpower’s ambitious Belt and Road initiative a two-way street. All it took was 12 days for a Dutch truck laden with automobile lubricant to make a 7,400 km journey from Germany to western China, via Poland, Belarus, Russia and Kazakhstan.

Overseas acquisitions to take a back seat as Chinese consumer brands sharpen domestic focus
BDA Partners expects selective outbound transactions to be centred around consumer health and wellness goods and well-recognised brands Expects deal size to rise despite a fall in actual M&A numbers

US senators press for China’s Huawei to be excluded from solar power market as those systems are ‘vulnerable to cyberattacks’
‘Both large-scale photovoltaic systems and those used by homeowners, school districts, and businesses are equally vulnerable to cyberattacks,’ the lawmakers say

Huawei targets 30% jump in 2019 smartphone shipments
Europe and China seen to offset US market setback, company official says

Under siege, Chinese telecoms gear champions Huawei and ZTE pitch 5G plans at MWC Barcelona
Shenzhen-based Huawei and ZTE push latest 5G products and innovations at mobile industry’s biggest trade show Huawei and ZTE, combined, have the biggest number of essential 5G patents in the world

Huawei defends its track record in data security, saying US has no evidence to back up Chinese spying allegations
Huawei gets almost half of its more than US$100 billion in annual revenue from overseas markets With peak data rates up to 20 times faster than 4G, 5G will serve as ‘the connective tissue’ for new mobile applications

Banning Huawei could be ‘hugely disruptive,’ warns Vodafone CEO
Vodafone boss Nick Read said banning Huawei from providing 5G infrastructure projects in Europe could be “hugely disruptive” to national infrastructure and consumers and could delay 5G roll-out in Europe by probably around two years. The CEO of the world’s second largest mobile operator showed his support to the Chinese company at the Mobile World Congress in Barcelona on Monday. He also called on US to share what it knows about Huawei’s security risks with Europe for “a fact-based risk-assessed review.”

Briefing: Banning Huawei could be ‘hugely disruptive,’ warns Vodafone CEO

China’s decision to re-leverage its economy is a major U-turn, and could have serious consequences
China is re-leveraging its economy, with lending rebounding after years of restrictions. Chinese companies are already snowed under large amounts of debt with these measures set to provide only a short term boost. “While the re-leveraging will likely be positive for short-term growth and equity market, it may increase investor concerns about China’s medium-term objective of containing leverage and financial sector risks,” said UBS analysts in a note.

US-China trade tension: effects on US property investment
As the trade war cools, new opportunities are emerging for Chinese property investment in the United States

China is the world’s most overheated stock market. So why are these top strategists calling it a buy?
A technical gauge has risen to the level last seen in the 2015 crash that wiped out US$5 trillion in market value But this run ‘still has some gas left in the tank,’ respected forecaster says

China’s Big Rally Struggles to Move Asia’s Needle
China’s outsized stocks rally has had an undersized impact on the Asia regional equity gauge, underscoring the debate over wider inclusion of the country’s domestic shares in global index benchmarks.

Will China’s beauty sector lose its glow as growth slows to 30-year low?
Estée Lauder crosses US$1 billion in sales and L’Oréal reports 25 per cent growth in sales for quarter ending in December Growth in China’s beauty and personal care sector was down by 1.9 per cent in December 2018

Betting on blockchain to simplify carbon trading
Last year, a Beijing-based team of environmental advocates founded Synergy Blockchain Technology with the goal of stimulating China’s carbon economy through blockchain-based trading. Their platform is designed to lower the cost of carbon trading and reduce friction for buyers and sellers.

Betting on blockchain to simplify carbon trading

China drove fintech funding globally in 2018 despite rising tensions with US, report says
Global investment in financial technology companies more than doubled to US$55.3 billion last year The largest fintech investment in 2018 was a US$14 billion fundraising by Ant Financial Services

Taiwan’s KMT presidential prospect pledges closer ties with Beijing
Eric Chu says incumbent Tsai Ing-wen’s pugnacious approach to mainland has failed Taiwanese polls suggest many figures popular with voters are yet to declare

The journey to China for British brands
The opportunity to ‘go east’ has never been greater. So why aren’t more brands making the move? Post-Brexit, businesses will need to look to different places if they are to attract consumers into the UK and build brands beyond Europe, says Puzzle’s Dan Beasley.

Britain Needs to Decide What It Wants From China
Mixed signals from London are hindering stronger economic ties with Beijing.

The China Challenge: Can repression coexist with innovation?
But as China expert George Magnus asks in his new book, “Red Flags: Why Xi’s China Is in Jeopardy”: “Will China be able to break the mold by showing that autocracy and repression and transformative innovation can coexist?” Magnus has his doubts, as he explains both in the book (“…the case for a marked slowdown in economic growth that might in time become unstable is hard to refute”) and in a recent podcast with me.

No apparent chaos yet, but fearful entrepreneurs are leaving Xi’s China
Many businesspeople feel increasingly insecure, especially as some entrepreneurs are “disappeared” by the government.

China Isn’t Having Enough Babies
Can the state keep up with the rapid aging of such a large population?

Balochistan: China’s achilles hill
Balochistan is crucial to the success of the China-Pakistan-Economic-Corridor (CPEC), but the restive province through which the initiative passes poses a stiff challenge to China as Baloch nationalists are up in arms against what they see as Beijing’s designs to exploit the area.

Could this be the end for China’s notorious household registration system?
Senior public security official flags plan to register people and provide services to them where they live – and not where they are born Immense barriers remain to change the hukou system that has divided urban and rural residents since the 1950s

The Militarization of Xi Jinping’s China
“Recovering” Areas They Never Have Ruled

China protests against US ‘provocation’ after two American warships pass through Taiwan Strait
Chinese Foreign Ministry spokesman Lu Kang told a daily press conference on Tuesday that “We resolutely oppose the United States taking provocative actions”. Lu said those actions were“not conducive to peace and stability in the Taiwan Strait and US-China relations”.

Why investors are shrugging off CNOOC’s massive offshore gas find in northeast China
The discovery is the biggest by a Chinese energy giant in Bohai Bay in half a century But not all of the reserve will be tapped and it will take years of investment to ascertain the amount of reserve that can be economically pumped

Audit and Tax Compliance in China: A Step-by-Step Guide for Foreign Companies
To achieve full compliance, foreign invested enterprises (FIEs) in China need to follow the specified audit and tax compliance procedures established by the government. In this article, we provide a step-by-step guide to conducting annual audit in China, including: general requirements, materials to be prepared, notes on regional differences, and tips from experienced accountants and auditors.

Alain Gillard
Information Officer
Service Asie Pacifique
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